60 www.resourceworld.com
F E B R U A R Y / M A R C H 2 0 1 5
numbers. "You have to look at the money
they're spending; it's a tremendous amount
of money and if this (overseas) pot dries up
we're in real trouble."
Stevens said the service industry likely
will bear the initial brunt of low prices
and they must ensure that they control
their fixed costs and adjust their work-
force. "Companies with strong balance
sheets will survive," he predicted, add-
ing that many of the smaller producers
have already cut their budgets but, in the
Alberta oilsands, companies tend to take
"the longer view" because their projects
are stretched out over a long time.
"The big players won't stop but the
marginal ones may be more at risk,"
Stevens said. He did agree that if oil prices
stay below $60 there won't be as much
growth in the future, and drilling for new
wells would be curtailed.
Scholz said the greatest concern is
retaining key people, often difficult to
do when there is decreased activity and
pullbacks. "It happened in 2008-09. We
lost a lot of senior people who found jobs
in other industries," he said. "It will be a
key strategy, to keep the rigs working as
long as we can so we can retain those key
people. We know things will turn around.
We're just not sure how long it will take."
He added that the oilsands might be insu-
lated more than the conventional side of
the business because of the significant
amounts of capital already deployed there.
Scholz said industry has two options
that could drive prices upward. North
American demand could be increased
through the government-supported use
of gas in the transportation industry and
biofuels in drilling. And, given that the
LNG players are ready to each invest up to
$30 billion in facilities require certainty,
especially about whether pipelines will be
allowed on aboriginal lands, the "political
games" being played in British Columbia
must stop so industry can get the product
off the continent to new markets.
"We're approaching tough times,"
Scholz said, "but when we come out of this
– and we will because the world needs
hydrocarbons – it will be pivotal for global
growth."
n
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